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European stocks edge lower; Italian banks, Chinese trade data weigh

Published Aug 08, 2023 02:26AM ET Updated Aug 08, 2023 04:11AM ET
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Investing.com - European stock markets edged lower Tuesday, as investors digested the latest German inflation numbers, Italian banking weakness and disappointing Chinese trade data.

At 03:50 ET (07:50 GMT), the DAX index in Germany traded 0.2% lower, the CAC 40 in France edged lower and the FTSE 100 in the U.K. dropped 0.1%.

German annual inflation slows in July

Germany started the week’s key inflation releases from around the globe, with data released earlier Tuesday showing that consumer prices in Europe's largest economy increased 0.3% on the month in July, matching the June number.

The annual figure fell to 6.2% from 6.4% the prior month, an indication that prices are falling in the eurozone’s most important economy, something that could persuade the European Central Bank to pause its prolonged tightening cycle at its next policy meeting in September.

This release is a prelude to the highly anticipated inflation figures from China overnight and the United States on Thursday, which are likely to set the tone for the rest of the week.

China trade data disappoints

Global stocks have been boosted by raised expectations that the U.S. economy will have a soft landing this year, avoiding recession as the Federal Reserve ends its aggressive interest rate hikes sooner than had been feared.

Further signs that U.S. inflation is slowing would add to that narrative, as could comments from the likes of Philadelphia Fed President Harker and Richmond Fed President Barkin later Tuesday.

On the other hand, the Chinese economy, the world’s second-largest, is struggling, with weak trade numbers out earlier Tuesday the latest illustration of this.

China's imports dropped 12.4% in July year-on-year, a more severe drop than the 5% forecast, while exports contracted 14.5%, steeper than an expected 12.5% decline and the previous month's 12.4% fall.

Intesa Sanpaolo, UniCredit slump on additional tax

In Europe, the stocks of Italian banks such as Intesa Sanpaolo (BIT:ISP) and UniCredit (BIT:CRDI) fell more than 6% after the country's government announced a new 40% tax on the “extra profits” of its banks this year.

The sector will also be in focus in the U.S. later in the session, after Moody’s credit agency downgraded the ratings of 10 small and midsize U.S. lenders.

Elsewhere, Bayer (ETR:BAYGN) stock fell 0.4% after the German drugs and pesticides maker confirmed that last month's cut to its full-year earnings target was mainly driven by a bleaker outlook for its Crop Science and Pharma divisions.

Glencore (LON:GLEN) stock fell over 3% after the global miner said its earnings had halved in the first half.

Crude retreats after weak Chinese data

Oil prices fell Tuesday, weighed by the weak Chinese trade numbers ahead of the latest U.S. stockpile figures.

Oil imports to China, the world's largest oil importer and second-largest consumer, in July were down 18.8% from imports in June though up 17% from a low base a year ago.

The American Petroleum Institute, an industry body, is scheduled to release its estimate of U.S. crude inventories later in the session, and is expected to show another drawdown after last week’s hefty fall.

By 03:50 ET, the U.S. crude futures traded 0.8% lower at $81.29 a barrel, while the Brent contract dropped 0.8% to $84.67.

Additionally, gold futures fell 0.2% to $1,965.55/oz, while EUR/USD traded 0.2% lower at 1.0978.

European stocks edge lower; Italian banks, Chinese trade data weigh
 

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Comments (3)
Nalule Justine Mary
Nalule Justine Mary Aug 08, 2023 4:24AM ET
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So when other countries show signs of cutting interest rates it's a negative for them but when American representatives sound dovish it's a positive for the dollar. What kind of narrative is this
Aug 08, 2023 4:24AM ET
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world economy is led by us. if they are hawkish, money would flow. but if europeans are dovish, it is not because of usa, but because of them. so money flows other currency
Gary Smith
Gary Smith Aug 08, 2023 4:18AM ET
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OK, so we have learned to NOT invest in Italy. Any country that makes up the rules after things happen, is not investable.
Boyan Davidov
Boyan Davidov Aug 08, 2023 3:12AM ET
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Inflation in Europe has not even budged for months. Not even statistically
Gary Smith
Gary Smith Aug 08, 2023 3:12AM ET
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That is not true. It started the year at 8.6%, 6.1% in May and 5.3% in July. Based on current trends, it should be around 3.5% or so by year end.
Boyan Davidov
Boyan Davidov Aug 08, 2023 3:12AM ET
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Please buy more, I like selling the rally
Boyan Davidov
Boyan Davidov Aug 08, 2023 3:12AM ET
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German CPI YoY started at 8.6 and is stagnating since May in the range 6.2-6.4. Not to mention Core CPI that seem rising again
 
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